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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (2674)	8/28/2002 8:16:36 AM
From: Proud_Infidel	Respond to of 25522

Chartered will need funds within nine months, say analysts By Jennifer Tan Reuters (08/28/02 06:01 a.m. EST) SINGAPORE -- Loss-making Chartered Semiconductor Manufacturing will need to raise money in the next six to nine months to boost financial ratios and fund its latest wafer fabrication plant, analysts said on Wednesday. On Tuesday, shares of the world's third-largest contract microchip maker sank more than 5% to a record intra-day low of S$2.37 on market rumors it might do a rights issue. Singapore-based Chartered's chief financial officer George Thomas told Reuters its funds were "sufficient" to keep it going but declined to comment specifically on the rights issue talk. At 0730 GMT on Wednesday, Chartered was down four cents or nearly two percent at S$2.39 in active trade of nearly six million shares. Chartered, which has seen a 31% slump in its book value due to six consecutive quarters of net losses, will need to lower its debt-to-equity ratio and start work on its advanced 300-mm plant, Fab 7, analysts said. The company, which has been bleeding since the January to March quarter of 2001, posted a record loss of $384 million last year. According to Multex Global Estimates, analysts expect Chartered to lose another $343 million this year after its net losses of $219 million in the six months to June 30. "There's a high probability in the next six to nine months that Chartered will need to come to the market to raise money, firstly to lower its debt-to-equity ratio, and also to fund Fab 7," Daiwa Institute of Research analyst Pranab Kumar Sarmah said. The company has targeted a debt-to-equity ratio of 50%, against analysts' estimates of 60% at the moment. Chartered has $831 million in cash and about $620 million in credit lines on standby, with the group's long-term debt at $1.1 billion. Equipping Fab 7 In contrast, rival Taiwan Semiconductor Manufacturing Co Ltd., the world's top contract maker of microchips, is in a net cash position. It has cash of T$66.4 billion ($1.9 billion) and total debt of T$54 billion ($1.6 billion). As at June 30, TSMC's operating free cash-flow, which measures cash generated by its operations and adjusted for capital expenditure, stands at $900 million, compared with negative $200.4 million for Chartered, analysts said. "Looking at Chartered's negative operating free cash-flow, you can tell that it's a matter of time before it goes to the market to borrow funds," said Warren Lau of HSBC Securities. "Fab 7 costs about $3 billion and Chartered would need to start moving equipment into Fab 7 by Q1 next year to meet the Q3 deadline. We're assuming $1 billion capex in 2003." Chartered has earmarked $500 million for capital expenditure in 2002 and has spent $169 million as at June 30. Gregory Yap of OCBC Investment Research said Chartered was likely to end 2002 with cash of about $500 million. "We believe Chartered is likely to raise funds from the market in Q4," he said. But Chartered officials said it would regulate its spending on Fab 7, which will use advanced 0.13-micron process technology. Analysts expect Chartered to raise funds through the equity market, possibly a rights issue, placement or a convertible bond. It raised $500 million via convertible bonds in March 2001. But the company will have to offer a sweetener in the form of a substantial discount to the current share price. "Without a huge discount, it'll be very tough to raise money if current market conditions persist," said HSBC's Lau.